Equity Accounting

AAA

DEFINITION of 'Equity Accounting'

A method of accounting whereby a corporation will document a portion of the undistributed profits for an affiliated company in which they own a position.

INVESTOPEDIA EXPLAINS 'Equity Accounting'

The amount of undistributed profits that the corporation decides to document is generally equal to the percentage of equity it controls. In many cases, the profits of the affiliated company are never distributed to the corporation.

RELATED TERMS
  1. Accounting

    The systematic and comprehensive recording of financial transactions ...
  2. Affiliated Companies

    Companies that are less than 50% owned by a parent company; the ...
  3. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  4. Income Statement

    A financial statement that measures a company's financial performance ...
  5. Book Value Reduction

    Reducing the value at which an asset is carried on the books ...
  6. Inherent Risk

    The risk posed by an error or omission in a financial statement ...
Related Articles
  1. Reading The Balance Sheet
    Investing Basics

    Reading The Balance Sheet

  2. Introduction To Fundamental Analysis
    Markets

    Introduction To Fundamental Analysis

  3. What are some examples of how cash flows ...
    Personal Finance

    What are some examples of how cash flows ...

  4. What is the difference between cash ...
    Fundamental Analysis

    What is the difference between cash ...

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center